How to Get the Best R&D Tax Advice in London
The right R&D experts can lower your Corporation Tax or reward your business with a cash sum. Find out how to get the best advice in London, right here.
R&D tax credits can be a little tricky - that’s why sourcing out the best advice can make a whole world of difference.
If your company is investing time, money, and effort in innovative projects within your industry, you might be entitled to R&D tax relief. With this relief, you'll be able to deduct up to 33% of your expenditures against your corporation tax bill. In some cases, you can even receive it as a cash sum from HMRC.
That sounds great, doesn't it?
It almost sounds like free money and let's face it, who doesn't like free money? The problem is that claiming this R&D tax relief isn't nearly as simple in practice as it sounds on paper. There’s a multitude of steps to follow, many requirements to comply with, and several challenges you’ll face along the way.
Fortunately, you can make the process a bit easier by choosing the right R&D tax advisor. When you do so, you’ll receive the best R&D tax advice in London and know exactly what expenses qualify for a successful R&D claim, when you'll be able to claim your rewards, and how much you'll be able to save thanks to this tax credit scheme.
But where do you start your search for the right R&D tax advisor in London? What services do they offer? In other words, how do you determine between an average number cruncher and a professional R&D tax advisor? In this article, we’ll look at these questions in more detail.
- What qualifies for R&D tax credits?
- What costs can you claim for R&D?
- How much does R&D tax relief provide?
- How far back can I claim R&D tax relief?
- Can I apply for R&D tax credits myself?
- The right R&D tax advice
- How to choose the right R&D tax advisor?
- The final word on R&D tax advice
R&D tax advice in London and beyond
However, before we go into finding the best R&D tax advice in the UK, we’ll first do a brief recap of what R&D tax credits are. This way, you’ll be more confident about finding professional, reliable services that cater to your exact business needs.
So what are R&D tax credits, what makes you eligible, and what you can claim?
What qualifies for R&D tax credits?
Firstly, you should understand that R&D tax credits are for every business in every industry. They aren’t withheld and only available to hadron colliders and cloning facilities. They are for any business that you can imagine.
However, just because your business is eligible to earn them, doesn’t mean that your business operations are…
As any R&D tax advisor will tell you, there are three main rules when it comes to tax credits. You must attempt to:
Create a new process, product or service
Improve upon an existing process, product or service
Overcome an existing problem or difficulty within your industry
And finally (but most importantly:
Be able to prove and justify your efforts within your business operations!
With these rules, there is also another fact that many businesses fail to understand, and therefore fail to even bother applying for R&D tax advice.
You don’t need to succeed to be able to apply for R&D tax credits
The only thing that is required of businesses to be eligible for R&D tax relief is to justify their attempts and to provide evidence that they attempted to research and development for qualifying operations.
Thousands of businesses fail to claim R&D tax credit relief every year because they didn’t know that they were eligible. Each one losing out on financial advantages that could help them scale up and grow.
Don’t let that be you.
What costs can you claim for R&D?
When you've crossed the hurdle of eligibility, the next question is: What costs can you claim for R&D tax relief? The simple answer is that you can claim tax relief for costs that have been expensed through your profit and loss account.
In some cases, you can also claim capitalised expenditure, provided that the assets that you've purchased have been classified as intangible assets.
Considering the above points, you'll be able to claim for costs including:
Agency or externally provided workers
The costs of subcontractors and freelancers
Software licensing costs
Consumable costs, including materials, utilities and equipment used or transformed during the research and development process
Payments to the subjects that participated in clinical trials
But here’s where things get tricky.
If your R&D efforts are located in the same building as your storefront / everyday operations; how much of your utility bills would class as under R&D and how much under your standard operating costs?
If a freelancer works on multiple projects with your company, how much of their costs would you attribute to standard work and how much to R&D?
These are some of the questions that require the best R&D tax advice to navigate. Professional R&D tax advisors know exactly how to maximise your claims while remaining legally compliant. But we’ll cover that further below.
How much does R&D tax relief provide?
If your company is a small or medium enterprise that generates a profit, you'll be able to claim about 24.7% of your R&D costs as tax relief. However, if your company is a small or medium enterprise that operates at a loss, you can expect to receive 33% of your R&D costs back. As mentioned earlier, you can use this relief as a rebate on your HMRC tax bill or get it paid out in cash.
Here, it's also important to remember that your R&D tax credit is not taxable income. As such, its accounting treatment is relatively straightforward, and you’ll show it in your income statement either as a corporate tax reduction or a credit.
The business owner’s complete tax planning guide
How far back can I claim R&D tax relief?
You can claim for R&D tax relief as far back as the previous two accounting years. Once you’ve tallied up your qualifying R&D costs, you'll be able to make your claim in your company's tax return or make an amendment to it.
Can I apply for R&D tax credits myself?
Now that we’ve recapped what R&D tax credits are and what you should look at to determine whether you're eligible and how much you'll be able to claim, the obvious question is: Can't you do it yourself? This simple answer is that you can, but if you don't have any knowledge of R&D tax credits, their eligibility requirements, and other criteria, you'll struggle to claim successfully.
Think of it like this. Let's say that you have a leak in your roof and you want to get it fixed. Whom would you call? Obviously, you’ll call a roofing contractor. Why? It's simple, roofing contractors are the experts in everything related to roofing. This means they'll be the right contractor to fix your roof.
Simply put, when you need something done right, you’ll go to the experts who know how to do it. So, if you go to the experts for everything else, why don't you do that for your R&D tax credits?
The right R&D tax advice
The best tax advisors come with specific qualities and aspects that you should search for in order to best meet your R&D needs and requirements.
Ask them to provide data on how many clients in your industry they've helped and whether any of those cases were similar to yours. Not only will you get an idea of the experience they have claiming R&D Tax Credits in your industry, but you’ll also be able to see their successful case studies.
The best R&D tax advisors will have plenty of know how about your industry but also long-standing successful relationships with their previous partners!
A good R&D tax advisor is knowledgeable about all aspects of your research and development tax credits. If they are, you'll know that they're qualified to help you claim on your behalf with HMRC.
And hopefully, after our recap, you’ll be more equipped to spot the exaggerators from the experienced.
Number of claim enquiries
Apart from their experience and their ability to manage and deal with R&D tax claims, you should also inquire how many enquiries they get on the claims they submit. This is important as it shows whether they understand what they can claim on your behalf.
In other words, if they get many inquiries, it means that they often claim expenses that businesses are not entitled to.
Contact with HMRC
The best tax advisors handle everything for you.
They submit the claim, and stay in contact with HMRC on your behalf throughout the process in order to deal with the occasional enquiry, facilitate your choice of tax relief and more.
Don’t settle for a tax advisor that will submit the claim and leave you by yourself.
Terms of engagement
Finally, you should look at their terms of engagement.
How much do they charge you to claim R&D tax credits on your behalf? How much are you likely to save in tax relief? The cost-to-benefit ratio must be suitable for your business.
The final word on R&D tax advice
We’ve illustrated why it’s vital that you use an R&D Tax Advisor to get the best R&D tax advice in London. If you do, you’ll have peace of mind knowing that the tax advisor will claim everything they’re entitled to on your behalf. In turn, this ensures that you save substantial amounts on your tax bill.
Just like Dynamo.
Dynamo was a Startup destined for success but found it difficult to navigate the vagaries of the tax relief for Startups. Luckily they turned to the best R&D tax advisors in London.
Our team of expert R&D tax advisors give the best R&D tax advice in London, and across the UK for that matter. We’ve helped CEOs and founders gain access to cash lump sums or reduce their corporation tax bills for their businesses by combining our high tech software with R&D experts. With over £30 million in claims processed and a world-class technical team, we’ve got the expertise you need.
To start receiving the best R&D tax advice, get in touch with us to discuss your unique needs and requirements. Remember to visit our School of Startups, the free online database of advice for Startups and founders to learn from experienced entrepreneurs to maximise their success!
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